Thornley v Ministry Of Defence

A conditional fee agreement is reasonable where existing before-the-event insurance has been exhausted and no other funding source is available, even though liability has been admitted. Success fees must reflect the actual litigation risk known when the agreement was made. Case complexity does not necessarily increase that risk. A costs judge may set a differential hourly rate for travel where the circumstances are exceptional, although the general hourly rate remains a matter for the permissible bracket.

The claimant’s personal injury claim had settled for £2.4 million plus costs. On detailed assessment, District Judge Bedford allowed substantial costs, including a success fee and solicitors’ travel costs. The defendant appealed against rulings concerning compliance with the Conditional Fee Agreement Regulations 2000, the reasonableness of entering into the conditional fee agreement, success fees, hourly rates, travel, documents and detailed assessment costs.

The appeal was heard by the High Court with costs assessors. The central issues were whether the claimant had continuing before-the-event insurance or another reasonable funding option, whether the success fees reflected the risks assumed, and whether the costs judge had properly assessed travel time.

1. Conditional fee agreement and funding. The before-the-event policy provided cover only up to £25,000 for unrecovered costs, which had been exceeded. Direct Line’s correspondence did not amount to an offer to increase the indemnity. There was therefore no continuing insurance cover which required advice under regulations 4(1)(c) or 4(1)(d) of the Conditional Fee Agreement Regulations 2000. The refusal to order disclosure of attendance notes was also proper, applying the guidance in Hollins v Russell [2003] EWCA Civ 718.
2. Reasonableness of the CFA. Once the existing indemnity had been exhausted and no alternative funding source was available, entering into a CFA was reasonable. The admission of liability and causation did not alter that conclusion.
3. Success fees. The solicitors’ 33.3 per cent success fee substantially exceeded the limited risk. The principal risk concerned a Part 36 offer, but an early effective offer was unlikely because the claimant was a child and the medical prognosis remained uncertain. Complexity could justify higher hourly rates, but did not necessarily justify a higher success fee. The fee was reduced to 15 per cent. Counsel faced no realistic risk of receiving no normal fee, so counsel’s success fee was reduced to nil.
4. Hourly rates and travel. The general hourly rates were within the permissible bracket for a high-value and complex claim. Travel to Scotland was reasonably recoverable, but travel was less onerous than substantive work. In this exceptional case a differential rate was permissible, and the travel time was to be assessed at the applicable guideline rates.
5. Documents and disposition. The assessment of documentary work was sufficiently reasoned and fell within the permissible bracket. The appeal was allowed in respect of the solicitors’ success fee and travel rates, and dismissed in all other respects.

The claimant’s costs were assessed by District Judge Bedford, the Regional Costs Judge for Leeds. The defendant appealed to the High Court. The High Court allowed the appeal on the solicitors’ success fee and travel rates, and dismissed it on the remaining grounds.